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Wednesday, December 4, 2013

Sugar Program Proposals for the Next Farm Bill - R42551

Remy Jurenas
Specialist in Agricultural Policy

The sugar program provides a minimum price guarantee to sugar crop processors and is structured to operate at no cost to the federal government—an objective largely achieved over the last decade using two tools: marketing allotments that limit the amount that sugar processors can sell, and import quotas that restrict the quantity of foreign sugar allowed to enter the U.S. market.

Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favor retaining the current program without change. They highlight the jobs and economic activity created by the domestic sugar sector. Food manufacturers that use sugar in their products seek flexibilities in how the U.S. Department of Agriculture (USDA) administers the sugar program, with an eye toward paying lower prices as a result. In advocating changes, they point to the higher wholesale refined sugar prices paid since the 2008 farm bill provisions took effect (twice the level compared to the previous 2002 farm bill period), and to the jobs that their firms create.

In the 113
th Congress, the House and Senate Agriculture Committees did not consider changes to the sugar program when they marked up a new farm bill. Both reported out farm bills that would continue the sugar program as now in effect through FY2019 (Section 1301 of H.R. 1947 and S. 954). Both bills also would continue the sugar-for-ethanol program—intended to be exercised if the other program tools do not succeed in keeping market prices above minimum guaranteed price levels.

Opponents of the sugar program introduced identical bills (S. 345 and H.R. 693, Sugar Reform Act) to serve as floor amendments to the farm bill. These measures would lower price support levels to those in effect in FY2008, make a number of changes to require USDA to administer sugar marketing allotments and sugar import quotas in ways that would result in sugar being available “at reasonable prices,” and repeal the sugar-for-ethanol program.

On June 10, 2013, the Senate approved its farm bill (S. 954). During floor debate, sugar program opponents offered S.Amdt. 925 to revise the Agriculture Committee’s reported sugar program provisions. Identical to S. 345, this amendment was defeated by a 45-54 vote. House opponents of the sugar program offered a similar amendment (H.Amdt. 227) during floor debate on H.R. 1947. On June 20, this amendment was defeated by a 206-221 vote. Though the House defeated H.R. 1947, a scaled back farm bill without a nutrition title (H.R. 2642) passed the House on July 11. It would reauthorize current sugar program authority without an expiration date, unlike S. 954, which would continue current sugar policy only through the 2018 crop year.

The Congressional Budget Office (CBO) estimates that if current sugar policy were continued, a 10-year total of $188 million in outlays would occur for FY2014-FY2023, all of it associated with the sugar-to-ethanol program. CBO scored the Sugar Reform Act as reducing these outlays by $82 million over this period. Separately, USDA actions taken in late FY2013 to reduce sugar supplies and activate the sugar-to-ethanol program to prop up market prices did not boost prices sufficiently above program-guaranteed levels. Consequently, these actions and processors’ decisions to hand over sugar pledged as collateral for loans resulted in federal outlays of an estimated $271 million in FY2013.

Sugar program supporters and opponents continued to present arguments for their respective positions during this year’s debate. For each side, debate revolves around what the level of domestic sugar prices should be. Sugar growers and processors seek the highest level possible, with the availability of backstops to ensure they receive the benefits of the current price guarantee. Users of sugar in manufactured food products seek as low a price as possible within the basic structure of the current program.

Date of Report: November 12, 2013
Number of Pages: 15
Order Number: R42551
Price: $29.95

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